PS5 Price Predictions

If they were paying attention, both Sony and Microsoft will have learned a lot from the PS4 and Xbox One release. Microsoft made a lot of mistakes in marketing and releasing their most recent console, and one of the biggest mistakes was how much they were charging for it. The PS4 was arguably a better console at a lower price, so why wouldn't consumers be drawn to it? When the PS5 and Xbox Two eventually come around, both companies will be trying to keep their prices lower than the other in order to secure the highest number of sales... With that being said, just how low can they keep those prices?

The first question to ask is what affects the price of a gaming console in the first place. There are two answers here: what the developer can charge, and what they're able to charge.

What they Can Charge

How much a console costs to make determines the price that at which the consumer is able to purchase it. Let's say the PS5 includes a (and this is totally made up) G6000 processor which is capable of putting out 4K resolution at 120fps. If this technology is fairly new and only one company is manufacturing the G6000, that company is going to be able to overcharge for it. If the technology has been around for a little while and there are four different companies manufacturing it, the G6000 is going to be a little cheaper.

So let's say that in Scenario A, the G6000 costs Sony $200 per console. In Scenario B, it only costs them $50 per console. In either scenario, Sony has to spend another $400 to finish the console (for the HDD, DualShock 5, disc drive, casing, shipping, etc.), so the total cost of the console in Scenario A is $600, while in Scenario B it's only $450.

What they are Able to Charge

If Sony were to sell the console at $600 or $450, they wouldn't be making a profit, because that's what it cost them to make. Every business in the world exists to make a profit, so Sony would tack on an extra dollar amount in order to actually make themselves some money off the PS5 (after all, they need to pay their employees, right?). Let's say they want to make a 10% profit. That makes the PS5 in Scenario A $660, while the PS5 in Scenario B would cost consumers $495.

Now, Sony has to figure out what the consumer is willing to pay. Let's say Microsoft prices the Xbox Two, which features comparable technology, at $500. The Scenario A PS5, at $660, simply wouldn't be able to compete. Therefore, Sony would either have to cut their profit margin down or find a different way to compete. However, if the $500 Xbox Two only had a (again, totally made up) G5000, which only features 1080p resolution and 60fps, Sony would have to figure out if consumers are willing to pay an extra $160 for better technology.

In Conclusion

Essentially, the price of the PS5 is still completely up in the air. It is ultimately dependent on how much it costs to make and how much consumers are willing to pay for it. Since the PS5 is still a long way off, it's anybody's guess at this point.